P3 deals all over the world (link round-up 7/31/14)

As I wrote back in 2011, both Republicans and Democrats both love the idea of public-private partnerships as one way to bolster infrastructure, but they have very different ideas about how they should work. Republicans want private investors to have more options, and by extension, more control, over our national infrastructure. Obama wants the opposite.

There is some confusion about what used to be outsourcing (services and goods) and P3s. In years past, when government promised a service that government could not provide on its own, such as paving roads, the government would send out a bidding process to hire a service provider to do the work. That is not a public-private partnership. P3s create a marriage between government and businesses, creating a dual ownership of the taxpayer-owned asset, such as the roads. P3s make you, the taxpayer, a shareholder in a private business whether you personally wanted to buy in or not. If the asset fails, or doesn’t perform up to predictions, the business doesn’t pay the loss, you do. (Think Solyndra)

Someone will try to convince you that P3s are “business friendly,” capitalistic, and are good for the country. These particular politicians promoting P3s are only looking to put you on the hook for their pet projects. They will tell you this is all very voluntary. But you know what? You, personally, did not volunteer your hard earned money to risk in these P3 ventures. You are necessarily forced to join a partnership contract and bear the risks of it. Where is the free market in that?

The new "U.S. Rural Infrastructure Opportunity Fund" will serve as a source of private-sector capital to partner with USDA on wide variety of infrastructure projects in rural communities. CoBank will act as anchor investor and has committed $10 billion of balance sheet capacity to co-lend with the fund.

Jones and others claim the Colorado Department of Transportation recently rammed through a recommendation to turn the retooling of I-70 into a public-private partnership, similar to the 50-year agreement CDOT sealed for U.S. 36 between Boulder and Denver.

The agency also touted an online poll, conducted among 1,643 visitors on CDOT's website from June 24 to July 9, that showed more than 50 percent of respondents want some sort of tolling and public-private partnerships to pay for new roads and maintenance. Nearly 37 percent said they wanted to increase the state gas tax or sales tax to pay for more free lanes, the poll said.

The project involves a unique public-private partnership in which the YWCA leased the land where the $11 million, six-story, 40-unit low- and moderate-income development to the Cambridge Housing Authority (CHA). A longtime eyesore, the former swimming pool site had fallen into disrepair and was no longer being used.

“It was a failed site for decades, and not being used at all,” says Cowles. Proposed projects such as an office building and a boutique hotel didn’t meet muster with the city, but with an intense need for more affordable housing in the area and the potential for the YWCA to benefit from the transaction, a deal was struck. The YWCA got advance cash for a much-needed building renovation, and the 99-year lease of the site by the CHA moved forward.
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A consortium of 13 different funding partners made the financing possible.

A 2013 analysis of Saskatchewan health facilities by VFA Canada gave Parkridge Centre's condition one of the worst ratings in the province, citing $68.5 million worth of work that should be done on the building - about 88 per cent of the cost of building it new.

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The Devine government used what was termed a "proposal-call" arrangement, asking developers to design and propose their own structures. The Wolfe Group won the contract, and entered into a 25-year agreement in which the government leased the $26-million Parkridge building from the developer.

Government didn't make a payment until residents had moved into the building.

The arrangement created such an outcry from the construction industry, the government said it wouldn't use the method for major construction projects again, "particularly health-care facilities."

Seven public-private partnerships, established under the EU's new research funding programme Horizon 2020, are being launched today. They represent a total investment of €19.5 billion into research and innovation over the next seven years, where the EU contribution of €7.3 billion will unlock a €12.2 billion investment from the private sector and the Member States. Together with four more public-public partnerships with Member States, they form an Innovative Investment Package representing an investment into Europe's future of over €22 billion.

These partnerships work in a number of fields crucial for Europe's economic growth, creation of jobs, industrial competitiveness, and well-being of citizens.

The European Commission today launched a €5 billion public-private partnership - ECSEL - to boost Europe’s electronics design and manufacturing capabilities. This initiative is the core of the Electronics Strategy for Europe to mobilise €100 billion in private investments and create 250,000 jobs in Europe by 2020. At the same time, the Commission received the final recommendations of the Electronics Leaders Group, CEOs from the largest electronics companies in Europe, for the concrete and immediate implementation of the strategy.

Vice-President of the European Commission @NeelieKroesEU said: "We need to join up our efforts if we are to win back and defend a leading position for Europe. I am happy that this partnership is now active - it shows that the EU and Member States can work together quickly when there is a clear case for action. The regulation to set it up was approved in less than a year!"

“In the past there’s been some relatively magical thinking about how to bring the private sector to the table,” said Gregory Adams, director of aid effectiveness at Oxfam America. “One of the most important things that USAID can do is bring some discipline to public-private partnerships and ensure that there’s some accountability to private sector delivering on their commitment.”

Beginning this summer, a team of global health correspondents will produce a Special Report for GlobalPost that examines how US-backed PPPs are impacting global health and how they became a premier strategy for USAID and other government agencies.

The reporters are poring over publicly available evaluations, documents, and audits, along with internal records from the US government, in order to gauge the transparency and accountability of recent global health PPPs. The review, which is ongoing, has found that such public information is limited, and often difficult to track down. [emphasis mine]

A public online database of USAID PPPs has not been updated since 2009, for instance. A Freedom of Information Act request filed to USAID two months ago for more comprehensive information about PPPs — including the locations of, and planned and actual financial commitments to such projects — has been only partially answered more than a month past the date it was due.

GLOBAL G.A.P., the Sustainable Agriculture Initiative (SAI) Platform and the International Trade Centre (ITC) are initiating a public private partnership dubbed the “The Declaration of Abu Dhabi for Global Food Security through Good Agricultural Practices”.

The partnership plans to make markets more accessible for farmers, help them sustain their livelihoods and reduce poverty and malnutrition. It also aims to ensure agricultural productivity, food safety and quality, and the sustainability of natural resources without compromising biodiversity and ecosystems.

A lack of understanding is fueling skepticism concerning cooperation between the public and private sectors in provincial Kazakhstan. For example, few businessmen know that such cooperation allows them to see strong returns on investments, remake exploitation costs and share risk and responsibility with the state. It is deputy chairwoman of the Kazakhstan Public-Private Partnership Dana Yeshimova’s job to answer questions about the PPP.

Kyrgyz authorities support the formation of public-private healthcare partnerships, the government press office said July 23.

Presently, the public lacks access to various medical services because the country doesn't have enough high-quality medical equipment, said Prime Minister Joomart Otorbayev, who chaired a July 23 meeting on improving health care.

"A public-private partnership could be highly effective [in solving this problem]," he said. "Investors could place equipment in state medical institutions. That would solve not only the problem of providing certain services to the public but also the problem of personnel loss from the state medical system and of high prices for medical services.

PPPs are becoming increasingly popular in India as its governments face up to the massive challenges of an economy and public expectations growing much faster than India’s poorly funded public sector can support. A recent international seminar on PPP in infrastructure was told that India ranks highest in the world for PPP projects. The definition of PPP varies between countries. However, in India PPP commonly refers to a tripartite mechanism that may include government, NGOs, and corporations. This mechanism has been given a boost because of the Indian government’s recent legislation making CSR mandatory for large Indian corporations. Such corporations are expected to return two of their profits through social projects.

"We are conscious of the fact that private participation can at times work to the disadvantage of the government and the users. This seems to have happened in the past in some cases. But we are committed to a fair, transparent and competitive approach towards PPP for ensuring that superior services are procured at the lowest possible cost," Singh has said in Parliament.

The response from Singh, who is minister of state for planning with independent charge, came after at least half a dozen members including KN Balgopalan, Mani Shankar Aiyar and KC Tyagi raised the issue saying that PPP project user charges have been rising too high.

The problem has become acute of late after some infrastructure projects got delayed by several years leading to an increase in costs. The resultant rises in user charges has led to protests, examples of this being the airports at Delhi as well Mumbai.

Most of the medium to large scale PPPs in the country, awarded mainly in the energy and transport sub-sectors such as roads, ports and airports, have been based on the cost-plus, build-operatetransfer (BOT) model, where costs are recovered mainly through user charges.

"In this budget, our department has made provisions to build roads to each and every village of Gujarat. This time, we have planned to build roads under the Public-Private Partnership (PPP) model to provide best infrastructure to the people," Patel announced in the House.

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"At present, we have planned three such projects using the PPP model. These include widening of the Chirai-Anjar road, the Surat-Olipad road and the Dakor-Sevalia road having cumulative length of around 85 km," Patel said.

New Delhi: All highways projects costing more than Rs 50 crore will now be taken under EPC mode with a slew of steps being taken to infuse a fresh capital in the road sector, the government on Thursday said.

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Unlike PPP model where the private sector has to fund the road building, in the EPC model, the government funds a highway, with private firms designing and building the road. He said the government has taken a number of steps to boost investor sentiments and encourage investment in roads in order to expedite projects.

Even as Road Transport and Highways Minister Nitin Gadkari has said that it is difficult to undertake projects on public-private partnership (PPP) basis in the current conditions, Finance Secretary Arvind Mayaram said the Government will have to depend on such partnerships for undertaking projects.

“PPP is more relevant today than it ever was,” Mayaram said at a FICCI event, pointing out that Government programmes such as implementing 100 smart cities and clean drinking water will have to be implemented on a PPP basis.

But Gadkari said none of the banks were ready to fund PPP projects in the current context.

Once India's new government is fully installed and a – hopefully – new approach to the aviation sector is bedded down, the prospects for innovation and improvement will grow exponentially. PPPs are one important part of that equation.

The growth in traffic which airport modernisation has supported has also made a significant contribution to local and national economies, while the improved infrastructure has been positive for the perception of India in the global market. Considering the transformation of the state of India’s metro airports from just a decade ago it is clear that the PPP model has delivered results far in excess of what the government would have been able to do by itself.

OGUN State governor, Senator Ibikunle Amosun, has called for more private sector involvement to help support and drive the government’s various infrastructure development policies.

According to the governor, all public infrastructure, including roads, drainages, as well as good schools, “are more of social services and levellers,” adding that they all required the complementary role of the private investors to get the state back to its enviable heights in all areas.

A new United Nations Industrial Development Organisation (UNIDO) and the Global Environment Facility (GEF) 5 Project has called for public-private partnership for increased electricity generation in The Gambia.

The project on "greening the productive sectors in The Gambia as well as promoting the use and integration of small and medium scale renewable energy systems in the productive sectors" was unveiled Monday by the minister of Energy, Dr. Edward Saja Sanneh, during a ceremony held at a local hotel in Kololi.

The Lower House on Wednesday endorsed the public-private partnership law during a session chaired by Speaker Atef Tarawneh and attended by Prime Minister Abdullah Ensour and cabinet ministers.

At the outset of the session, Ensour dismissed remarks made a day earlier by MPs who had labelled the legislation as an "overture towards privatisation and corruption" and demanded that it be rejected. He said the law is part of the legislation aimed at ushering in economic reforms and that the partnership council that will come up under the law will be headed by the prime minister and include a number of ministers. This, he said, would ensure that the new system is not dominated by the private sector.

"There is no reason for fears expressed by the lawmakers that the private sector would control the government's decisions in the partnership board," he explained.

The APPP conference is in its 6th edition and has evolved into Africa’s premier PPP event, unparalleled in its presentation and reputation as a definitive platform and a strategic forum to initiate the next PPP deal as well as establishing and cementing business partnerships and accessing PPP project information.

Focusing on Infrastructure sectors of Energy, Transport, Roads, Airports, and social sectors amongst others, the African Public Private Partnership Conference remains Africa’s premier PPP conference and definitive source of hard information on PPPs. The 2014 edition will once more gather key decision makers from both the public and private sectors under one roof.

...and these are just from the past month.

P3 deals aren't going away any time soon, so we better learn what we can now that we'll all be stuck with one (or several) in the future.